IPO Lock-Up

Filed Under » , , , ,
Dictionary Says

Definition of 'IPO Lock-Up'

A contractual caveat referring to a period of time after a company has initially gone public, usually between 90 to 180 days. During these initial days of trading, company insiders or those holding majority stakes in the company are forbidden to sell any of their shares. Once the lock-up period ends, most trading restrictions are removed.

Also referred to as "lock-up period".
Investopedia Says

Investopedia explains 'IPO Lock-Up'

An IPO lock-up is done so that the market is not flooded with too much supply of a company's stock too quickly. Typically, only 20% of the outstanding shares are initially offered to the investing public. A single large shareholder trying to unload all of his holdings in the first week of trading could send the stock downward, to the detriment of all shareholders.

There is also empirical evidence suggesting that after the end of the lock-up period, stock prices experience a permanent drop of about 1-3%.

Related Video for 'IPO Lock-Up'

Articles Of Interest

  1.

    Interpreting A Company's IPO Prospectus Report

    Learn to decipher the secret language of the IPO prospectus report - it can tell you a lot about a company's future.

  2. 5 Tips For Investing In IPOs

    Thinking of investing in IPOs? Here are five things to remember before jumping into these murky waters.

  3. Initial Public Offering (IPO) Explained

    An initial public offering (IPO) marks the start of a company's publicly traded life. Find out why companies undergo IPOs, and how the process works.

  4. How can average investors get involved in an IPO?

    An initial public offering, or IPO, is the first sale of stock by a new company, usually a private company trying to go public. An IPO often serves as a way for companies to raise capital for ...

  5. IPO Lock-Ups Stop Insider Selling

    Ownership plays a key role when companies go public. Find out how.

  6. IPO Basics Tutorial

    What's an IPO, and how did everybody get so rich off them during the dotcom boom? We give you the scoop.

  7. Coty Readies IPO

    Fragrance maker Coty filed a registration statement amendment May 28 that sees it raising as much as $1.2 billion from its IPO. Coty tried to buy Avon for $10.7 billion in 2012 but was unsuccessful. ...

  8. Ski-Doo IPO Raises $254 Million: Should You Buy?

    Read on and I'll look into if you should buy Ski-Doo's stock once it becomes available.

  9. Marketo Jumps 67% in IPO Debut-Time To Sell?

    Software startup Marketo went public May 17. Its stock closed up 64% in its first day of trading. Time to sell your shares and move on? I'll have a look...

  10. Claire's: Should You Accessorize With Its IPO?

    Apollo Global Management is taking accessories retailer Claire's public. Should you get in on this IPO? I'll take a look.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Yield Elbow

    The point on the yield curve indicating the year in which the economy's highest interest rates occur. The yield elbow is the peak of the yield curve, signifying where the highest interest rates occurred.

  2. Xenocurrency

    A currency that trades in markets outside of its domestic borders.

  3. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.

  4. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.

  5. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.

  6. Samurai Bond

    A yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.
Trading Center
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=b5e99c78c81432dfb84360ca518b2498